LIVESTOCK-U.S. hog futures rally on expectations for Chinese buying

CHICAGO, Sept 12 (Reuters) - U.S. lean hog futures climbed the daily exchange-imposed limit on Thursday on increasing expectations for Chinese buying as the world’s two largest economies prepared for talks aimed at breaking the logjam in their trade war.

The Chicago Mercantile Exchange (CME) will temporarily expand the trading limit to 4.5 cents on Friday after October lean hogs jumped the maximum 3 cents to 63.175 cents per pound. December lean hogs climbed 3 cents to 64.200 cents per pound.

Prices exploded as China’s Commerce Ministry said Chinese firms have started to inquire about prices for U.S. farm goods and that possible purchases included pork.

“It’s all China,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting. “It’s all this speculation and this recent news that there’s Chinese buyers sniffing around, looking at pricing.”

Lower-level U.S. and Chinese officials are expected to meet within days in Washington ahead of talks between top trade negotiators in early October, seeking to ease the tit-for-tat tariff dispute that has rattled financial markets for more than a year.

Beijing imposed retaliatory tariffs of 50% on imports of U.S. pork last year, slowing sales, and raised tariffs by another 10% on Sept. 1. That brought the total duty to 72%, as U.S. pork faced a 12% tariff prior to the trade war.

Still, China from Aug. 30 to Sept. 5 bought 10,878 tonnes of U.S. pork, its biggest purchases since May, U.S. Department of Agriculture data showed. It was not clear if the pork purchases were made in the days before Sept. 1 or after.

U.S. meat traders have been anticipating a pork shortage in China due to an outbreak of African swine fever, a fatal pig virus that has reduced the Chinese herd by a third in the past year.

“There’s a fair amount of people there that want to be bullish hogs,” Kalo said. “Whenever the political part of it seems to be on a better track, they certainly jump in hogs.”

Cattle futures were also settled higher in a turnaround from recent losses. Futures and cash prices were under pressure recently because a fire at a Tyson Foods slaughterhouse in Holcomb, Kansas, last month removed a key buyer from the market.

CME October live cattle futures ended up 0.225 cent at 98.725 cents per pound and reached a one-week high. October feeder cattle rose 0.475 cent to 134.500 cents per pound.